Background: The Major Histocompatibility Complex (MHC) is essential for immune function. Historically, it has been subdivided into three regions (Class I, II, and III), but a cluster of functionally related genes within the Class III region has also been referred to as the Class IV region or "inflammatory region". This group of genes is involved in the inflammatory response, and includes members of the tumour necrosis family. Here we report the sequencing, annotation and comparative analysis of a tammar wallaby BAC containing the inflammatory region. We also discuss the extent of sequence conservation across the entire region and identify elements conserved in evolution. Results: Fourteen Class III genes from the tammar wallaby inflammatory region were characterised and compared to their orthologues in other vertebrates. The organisation and sequence of genes in the inflammatory region of both the wallaby and South American opossum are highly conserved compared to known genes from eutherian ("placental") mammals. Some minor differences separate the two marsupial species. Eight genes within the inflammatory region have remained tightly clustered for at least 360 million years, predating the divergence of the amphibian lineage. Analysis of sequence conservation identified 354 elements that are conserved. These range in size from 7 to 431 bases and cover 15.6% of the inflammatory region, representing approximately a 4-fold increase compared to the average for vertebrate genomes. About 5.5% of this conserved sequence is marsupial-specific, including three cases of marsupial-specific repeats. Highly Conserved Elements were also characterised. Conclusion: Using comparative analysis, we show that a cluster of MHC genes involved in inflammation, including TNF, LTA (or its putative teleost homolog TNF-N), APOM, and BAT3 have remained together for over 450 million years, predating the divergence of mammals from fish. The observed enrichment in conserved sequences within the inflammatory region suggests conservation at the transcriptional regulatory level, in addition to the functional level. © 2006 Deakin et al; licensee BioMed Central Ltd.